From Zig To Zag

China In 2026: Further Policy Ease Coming

America’s funding cycle is peaking after three long years of expansion, as cost inflation pressures rise and a steadily stronger real economy mops up surplus financial liquidity. But while US Liquidity zigs lower, so Chinese Liquidity is set to zag higher. Evidence the chart below. China sits at the opposite extreme of price deflation and economic weakness and looks slated to expand liquidity significantly into 2026. This growing monetary divergence between China and the US in 2026 must be seen through the lens of on-going Capital Wars.

This is Part 5 of our Asset Allocation theme Prospects for 2026. Here we focus on China. Parts 1-4 have already been published.